BBVA, Indra Test the First Corporate Loan Using a Blockchain

Spanish bank BBVA has become the first global bank to issue a loan
using distributed ledger technology (DLT), Financial
Times reported recently.

Founded in 1857, BBVA is one of
Spain’s leading banks and a major global financial services group. BBVA is also
the biggest financial institution in Mexico and has a strong presence in South
America and the Sunbelt region of the U.S.

“Blockchain [technology] can offer clear advantages for all sides
in the corporate loan market in terms of efficiency, transparency, security,”
said BBVA CEO Carlos Torres Vila, according to the Financial Times report. “It’s another strong example of how
disruptive technology can be used to add value to financial services, something
that is central to our strategy.”

Financial Times noted that DLT can speed up and
simplify complex transactions by making changes and updates immediately visible
to all parties. These benefits are especially significant for corporate and
syndicated lending, which typically involve many participating actors that need
access to transaction records. Another important consideration is that a single
DLT system is cheaper to maintain than multiple systems used by different
banks.

According to a BBVA
press release, this is the “first global corporate loan transaction using
blockchain technology from the negotiation of the deal to its signing.” The
pilot project, completed in collaboration with Spanish technology company
Indra, enabled the closing of a €75 million loan using a DLT solution developed
by BBVA.

Indra is an
information technology (IT) leader in Spain and Latin America and a worldwide
provider of proprietary solutions for the transportation and defense markets.
Both BBVA and Indra participate in global projects to create DLT standards such
as R3, Hyperledger, the Enterprise Ethereum Alliance and Spain’s Alastria.

“BBVA is involving its clients in project processes such as requirements
definition, development, and implementation,” said
Ricardo Laiseca, BBVA’s head of global finance for corporate and investment banking,
according to the press release. “In this way, BBVA provides its customers with
not only the best financial solutions, but also the most advanced technical and
innovative capabilities.”

Derek White, BBVA’s global head of customer solutions, added that
DLT has proven to increase the transparency and speed of transactions, while also
improving their efficiency.

The negotiation process and completion of conditions between BBVA
and Indra was developed on an internal solution built on the Hyperledger codebase. It’s worth noting
that Carlos Kuchkovsky, CTO of new digital business at BBVA, was
recently confirmed as a member of the Hyperledger Governing Board. In his
statement
about the confirmation, Kuchkovsky noted that BBVA is
using Hyperledger technology in several projects and stated that the bank wants
to increase its contribution to Hyperledger by collaborating with other members
and contributing to its open-source projects.

Once the contract between BBVA and Indra was agreed upon, the
Ethereum public testnet was used to register the hash of the transaction’s
documentation. A joint
press release emphasized that registration on a public blockchain guarantees
the integrity of the agreed contract, as any amendment in the agreed document
would lead to a completely different hash.

Indra has also developed DLT products and solutions across a
number of industries, including in the financial, insurance and retail sectors.

“Indra is at the vanguard when it comes to creating applications
based on blockchain [technology], which is destined to become one of the
technologies that will change the way we interact with products and financial
services,” said Borja Ochoa, director of financial services at Indra, per the
press release. “This pilot served as an opportunity to take part in the first
corporate loan operation based on blockchain technology in the world. The
operation strengthens the position of BBVA and Indra as leaders in the
practical application of blockchain technologies.”